Difference between OutStake and Pendle

Currently, Pendle is the most popular native yield staking protocol on the market. Here’s a comparison of Outstake and Pendle, highlighting the advantages of Outstake and the problems it addresses:

1. Token Types and Composability

   • Pendle: The minted PT (Principal Token) and YT (Yield Token) have expiration dates. PT and YT are not standard ERC20 tokens but are closer to NFTs (Non-Fungible Tokens). Throughout the operation of the protocol, Pendle deploys numerous PT and YT contracts for the same Native Yield Token with different staking expiration dates, leading to fragmented liquidity and limiting the composability and use cases of assets on Pendle. In particular, YT's value goes to zero upon expiration, further restricting its usability.

   • OutStake: The minted PT and YT are standard ERC20 tokens with no expiration date and can be freely integrated into other DeFi protocols. During the operation of the protocol, there is only one corresponding YT and PT contract for each Native Yield Token, which enhances composability and flexibility. Importantly, Outstake's PT is a universal asset principal token(UPT), allowing the minting of the same PT when staking Native Yield Tokens of the same native asset type, thereby sharing liquidity. Additionally, Outstake's YT can be viewed as a stablecoin pegged to the yield rate, enabling users to take long or short positions on the yield rate.

2. Fixed Rate Yields

   • Pendle: The quantity of PT minted is equal to the amount of staked tokens, and PT experiences a time-decreasing negative premium. The fixed-rate yield comes from the negative premium of PT, which represents the losses incurred by stakers and users who purchase YT. To obtain a fixed interest rate, users must purchase the corresponding PT. Due to the negative premium of PT, early sellers of PT incur losses, significantly reducing the practical value of PT and making it difficult to integrate into other DeFi applications.

   • OutStake: The number of PT minted is related to the amount of YT minted and the redeemable value of YT, avoiding the negative premium of PT. Outstake introduces tradable Position Options Token (POT), representing the redemption rights of native yield tokens at the end of the lock-up period. This allows users to obtain fixed-rate rights without trading PT, improving capital efficiency. The yield comes from demand exchanges, not from staking losses.

3. YT Value

   • Pendle: The value of Pendle's YT is heavily influenced by protocol incentive points, causing a significant deviation between its price and the actual yield of the native yield tokens. The protocol can arbitrarily manipulate YT through incentive points, posing a serious risk of centralization. Investors who purchase YT solely for yield will suffer significant losses, and the trade fees are very high, leading to low trading volumes of YT in the market and almost no composability.

   • OutStake: The value of Outrun's YT is directly related to the yield of the native yield tokens and is not affected by protocol incentive points, avoiding the risk of price manipulation. As a result, Outstake's YT is more decentralized and has stronger financial properties and composability. Investors can simply trade YT to speculate on interest rates. In the future, incentive points will be directed towards PPT (Position Points Token), allowing users to trade incentive points independently, further enhancing market transparency and efficiency.

4. Staking Duration

   • Pendle: The staking duration is determined by the protocol, and users cannot freely choose the staking period.

   • OutStake: Users can freely select the staking duration, controlling the amount of PT minted. The staking duration is abstracted as POT, making the position expiration time a tradable asset, further increasing flexibility.

5. Yield Sources

   • Pendle: Pendle does not generate real external yield; its fixed-rate yield essentially comes from the losses of stakers and users who purchase YT. The high fixed-rate yields of Pendle in the past were primarily due to various airdrop points from Restaking and other protocols, which led users to willingly incur losses in exchange for airdrop rewards, creating a temporary high fixed yield.

   • OutStake: Through the Outrun ecosystem, which supports multiple assets, Outstake creates a rich arbitrage market and multiple income sources. Users can earn native yields, fixed-rate returns from trading POT, enhancing the overall profitability and scalability of the protocol.